Seeks to Make Satellite-Radio Provider a Wholly Owned Subsidiary

Liberty Media Corp. unveiled a proposal to make satellite-radio provider Sirius XM Holdings Inc. a wholly owned subsidiary, a move that would give the media-investment company access to a new source of capital as it pursues a big cable merger.

The transaction would convert Sirius's common stock into new Liberty Series C nonvoting shares. The proposed exchange ratio would value Sirius common stock at about $3.68 a share, a 3.1%...